Correlation Between Puloon Technology and Wonil Special

Can any of the company-specific risk be diversified away by investing in both Puloon Technology and Wonil Special at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Puloon Technology and Wonil Special into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Puloon Technology and Wonil Special Steel, you can compare the effects of market volatilities on Puloon Technology and Wonil Special and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Puloon Technology with a short position of Wonil Special. Check out your portfolio center. Please also check ongoing floating volatility patterns of Puloon Technology and Wonil Special.

Diversification Opportunities for Puloon Technology and Wonil Special

0.42

Correlation Coefficient

Puloon Technology  Wonil Special

Very weak diversification

The 3 months correlation between Puloon and Wonil is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Puloon Technology and Wonil Special Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wonil Special Steel and Puloon Technology is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Puloon Technology are associated (or correlated) with Wonil Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wonil Special Steel has no effect on the direction of Puloon Technology i.e., Puloon Technology and Wonil Special go up and down completely randomly.

Pair Corralation between Puloon Technology and Wonil Special

Assuming the 90 days trading horizon Puloon Technology is expected to under-perform the Wonil Special. In addition to that, Puloon Technology is 2.36 times more volatile than Wonil Special Steel. It trades about -0.01 of its total potential returns per unit of risk. Wonil Special Steel is currently generating about 0.05 per unit of volatility. If you would invest  702,270  in Wonil Special Steel on December 23, 2024 and sell it today you would earn a total of  14,730  from holding Wonil Special Steel or generate 2.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Puloon Technology  vs.  Wonil Special Steel

Puloon Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Puloon Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Puloon Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Wonil Special Steel

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wonil Special Steel are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Wonil Special is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Puloon Technology and Wonil Special

The main advantage of trading using opposite Puloon Technology and Wonil Special positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Puloon Technology position performs unexpectedly, Wonil Special can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Wonil Special will offset losses from the drop in Wonil Special's long position.

The idea behind Puloon Technology and Wonil Special Steel pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.